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2020 MarsdenLR 132
COURT OF APPEAL SHAH ALAM
MEGA FOREST PLANTATION MANAGEMENT SDN BHD – Appellant
Versus
PENGARAH PERHUTANAN NEGERI SELANGOR & ORS – Respondent
[Civil Appeal No: B-01(A)-682-12-2018]
Appellant lacked locus standi in judicial review as shareholders cannot claim rights over company assets, and the state retains ownership of the forest produce.
Headnote:(A) National Forestry Act 1984 – Sections 14 and 15 – Contracts Act 1950 – Section 24 – Judicial review application concerning reforestation project – Appellant lacked locus standi as shareholder of MNSB to seek remedies related to trees planted on state land – The State retained ownership of forest produce within a permanent reserved forest – Judicial review application dismissed. (Paras 21, 37, 76)
(B) Illegality of Joint Venture Agreement (JVA) – JVA declared illegal due to failure to obtain Minister of Finance's consent – No legal interest in assets of MNSB as shareholders cannot assert rights over company assets. (Paras 84, 90)
Facts of the case: Appellant, Mega Forest Plantation Management Sdn Bhd, sought judicial review to quash eviction notice regarding sub-leased land for reforestation, claiming investment in Sentang trees planted by its subsidiary. (Paras 1, 34)
Findings of Court: Appellant was determined to lack legitimate legal standing to bring the application and all claims were previously litigated in Suit 514. (Paras 36, 96)
Issues: The main issues were the legality of the eviction notice, the appellant's locus standi, and the compensation for the alleged investment in the reforestation project. (Paras 36, 37)
Ratio Decidendi: Shareholders have no legal interest in the company's assets; the JVA was rendered void due to illegality, and thus the appeal based on shareholder claims lacks merit. (Paras 83, 96)
Result: Appeal dismissed with no order as to costs.
Introduction
[1] This is an appeal against the decision of the learned judge of the High Court at Shah Alam dated 5 November 2018 dismissing the appellant's application for judicial review with costs of RM15,000.00 to be paid to the respondents. The appellant in this appeal is Mega Forest Plantation Management Sdn Bhd [No Syarikat: 292996-W] ("the appellant"). On 23 June 2020, we dismissed the appellant's appeal with no order as to costs.
[2] The application for judicial review concerns a reforestation project which had been undertaken by the appellant through its subsidiary, Megafores Nursery Sdn Bhd ("MNSB"). The appellant held 51% of the issued share capital in MNSB and the balance 49% was held by an entity known as Perbadanan Kemajuan Pertanian Selangor ("PKPS"). PKPS is a statutory body established under the Selangor Agricultural Development Corporation (Amendment) Enactment No 12 of 1972 [No 7 of 1982] ("the 1972 Enactment"). PKPS was incorporated to inter alia "encourage the industry or agricultural development inside and outside of the State of Selangor" (See: s 12(1) of the 1972 Enactment).
[3] PKPS is also subject to the provisions of the Incorporation (State Legislatures Competency) Act 1962 ("the 1962 Act"). In particular, s 14(1) of the 1962 Act (which is in pari materia with s 14B(1) of the 1972 Enactment) provides that the prior written consent of the Minister of Finance ("MOF") is required before the corporation (PKPS) can establish a company to carry out activities under the control or partial control of the corporation itself or independently.
[4] It is necessary to mention that in a winding-up petition which was filed by PKPS via Kuala Lumpur High Court Companies (Winding-up) No: D-28- NCC-65-2010, it was established that PKPS had failed to obtain the prior written consent of the MOF to incorporate MNSB and to hold 49% of its shareholding. The High Court held that the incorporation of MNSB was in fundamental breach of the statutory requirements under s 14 of the 1962 Act and s 14B of the 1972 Enactment. On 14 September 2010, MNSB was wound up by the Kuala Lumpur High Court.
[5] At any rate, prior to the winding-up of MNSB and pursuant to the reforestation project, trees of the Sentang variety were planted on part of a parcel of land which had been leased by the State of Selangor to PKPS and thereafter sub-leased to MNSB. According to the appellant, the trees had matured and have commercial value. The replanting of Sentang trees was done by MNSB, but the financing for the project was procured by the appellant through loans from Agrobank.
[6] After MNSB was wound up, the appellant filed a civil action against PKPS over the reforestation project but was unsuccessful. There was also a judicial review application over the same project, which was commenced by an entity known as Mega Forest Plantation Sdn Bhd ("MFPSB") against PKPS and the State via Shah Alam High Court Application for Judicial Review No 24-74-2011, but this was struck out on 18 June 2015. It ought to be mentioned that Mega Forest Plantation Sdn Bhd is not the same entity as the appellant whose name is Mega Forest Plantation Management Sdn Bhd. They are entirely separate legal entities.
[7] The 1st respondent subsequently issued a letter dated 13 December 2017 to the appellant demanding that they vacate the sub-leased land within 30 days from the date of the letter ("the impugned letter").
[8] The appellant commenced the judicial review proceedings to obtain:
(a) an order of certiorari to quash the impugned letter;
(b) an order of mandamus to compel the respondents to appoint two licenced valuers to prepare valuation reports to ascertain the value of assets on the said forest land and to thereby determine the appropriate compensation to be paid to interested parties (including the appellant); and
(c) a declaration that the appellant is entitled to claim compensation as the contributory/shareholder of MNSB (sub-lessee).
Background Fac
